A very complicated topic especially when mixing RL politics with game lore. I was hesitant to enter this discussion, but this is not Reddit, we're under Pax Tavernus here, so I really want to share my many thoughts on this.
1. In case that even needs clarification for anyone, I think racists (or anyone who hates, judges or stereotypes people by any characteristics that have nothing to do with their character and behaviour) are assholes, period.
2. Even in biology, with animals, it's sometimes complicated where characteristics are different enough to say another race begins. Generally I have understood that biologists agree the genetics between different phenotypes of humans aren't big enough to be called another race.
3. Meanwhile, it's usually agreed that a different species means they can't mix, can't produce offspring, like an eagle and a sparrow or an antelope and a zebra, or if they're close enough like horses and donkeys, they can have offspring but those will be infertile.
4. To me that means humans, turians and krogans are different species, not races. They didn't even evolve on the same planet, makes sense.
5. So yes, if humans, elves and orcs are suddenly declared different species, that would be the reason why half-orcs, half-elves and all that no longer exist. Because those species can't have children together.
6. If the main reason for this is the fact that "race" is a politically loaded term that makes many people uncomfortable, it's a very bad reason, especially if it was preemptive actionism and not because a lot of players who belong to groups facing discrimination based on skin colour or facial shape took offence.
For example DragonKing, a user on Beamdog Forum who is black and has indeed faced RL racism, was the most vehement opponent of people who claimed drow being portrayed as mostly evil is racist, because drow are a fantasy race, they're not black people. I know one person isn't representative, but it's an example that sometimes fantasy worlds and RL have to be seen separately.
7. So to make people less uncomfortable, D&D races are now species. Biologically that means mixed parentage no longer exists, meaning an elf and a human can no longer have children together. So is that better in bringing people together, or doesn't it create an artificial chasm that didn't exist before?
Or they say "yay overcomplicated politics but screw biology" and two species can have fertile offspring, you're just not allowed to call them half-orc or half-elf, maybe because orcs and elves petitioned they should be called half-humans?
But you can customize them enough to look like one?
That makes even less sense.
From a gameplay perspective, I always found it interesting to have those mixed options for compromise between certain racial feats or bonuses, and for role-playing I liked the option of playing a half-elf who is with one foot in both worlds and at home in neither.
Also, what about in-game romance?
I'm sure I had more points on my list but I can't think of them right now.
Btw on the topic of "evil" races and fixed alignment, I recommend
this post by
@BelgarathMTH about the origins of D&D and where the whole original issue of some races having a fixed alignment came from: A war game where some pieces had to be on the other side of the board and were therefore called "evil".
That is a change I consider very positive by the way, that the rigid alignment system has been broken up, but the whole "let's call them species" issue makes no biological sense, because we humans use the term "race" IRL where it isn't correct, and overthrowing a game concept that could actually encourage tolerance (what do different shades of brown skin colour matter when your best friend is green and has tusks?) won't improve how humans IRL treat each other.